It’s Still A Duck: Court Re-Affirms That First Sale Doctrine Can Apply to “Licensed” Software

Building on a prior ruling, a federal court has re-affirmed that a Seattle man was not infringing copyright law by re-selling software he obtained from an Autodesk customer.

The ruling is bound to frustrate the copyright industries, which have struggled for years to convince courts and their customers that the only thing you “buy" when you buy software is a limited and temporary right to use that software under certain conditions. In other words, they claim buyers aren't owners.

The distinction is no mere technicality. Under the Copyright Act, owners of copyrighted material are given substantial rights in the particular copies they purchase. One of the most important of these protections is the "first sale" doctrine, which says that once you've acquired a lawfully-made CD or book or DVD, you can lend, sell, or give it away without having to get permission from the copyright owner. Without the first sale doctrine, libraries would be illegal, as would used bookstores, used record stores, video rental shops, CD-swapping communities and so on. If those books, records, videos etc. were merely licensed, the seller could use the license to could force consumers to always buy new software, even if they would prefer to buy an older, possibly less expensive, version.

Autodesk would like to do just that, which is why it carefully polices secondary markets for its expensive AutoCad design software. After Autodesk repeatedly alleged that Timothy Vernor was violating copyright law by attempting to re-sell copies of AutoCAD software on eBay (which he had obtained from an Autodesk customer), Vernor asked a Washington federal court to declare that his activity was legal under the first sale doctrine. Autodesk predictably responded by insisting that AutoCAD is licensed, not sold, and therefore the first sale doctrine did not apply. The court ruled for Vernor. Autodesk then recruited an expert, put some additional facts on record, and effectively asked the court to reconsider its decision.

Autodesk’s arguments were no more successful the second time around. Judge Richard Jones found that while the sale was subject to numerous restrictions, it was nonetheless a sale, which means the customer had all the rights of an owner, and thus would not infringe AutoDesk’s copyright by re-selling the software. The court noted that while Autodesk imposed typical software industry contractual restrictions on use and transfer, its license agreement allowed the customer from whom Vernor bought the software to keep the copies forever, for a one-time fee. In other words, the transaction looked more like a book purchase (you pay your money, you get a copy to keep) than, say, a music subscription service.

Autodesk is likely to appeal, which means this case is headed to the Ninth Circuit Court of Appeals. The appellate court is already considering similar issues with two other cases: UMG v. Augusto (EFF represents Mr. Augusto, with Durie Tangri LLP) and MDY v. Blizzard. Let’s hope Ninth Circuit takes full advantage of this opportunity to protect the rights and expectations of consumers.

Related Updates

Washington, D.C.—The Electronic Frontier Foundation won petitions submitted to the Library of Congress that will make it easier for people to legally remove or repair software in the Amazon Echo, in cars, and in personal digital devices, but the library refused to issue the kind of broad, simple and robust...

Update December 4, 2018: The Supreme Court denied certiorari in this case today. That means that the Second Circuit’s ruling will stand. We are disappointed that the Supreme Court did not fix the lower court’s error and hope that the decision does not lead to further erosion of...

H.R. 1695 Would Turn an Essential, Non-political Job Into a Partisan Appointee If we’ve learned one thing from this year in American politics, it’s that presidential appointments can be a messy affair. Debates over appointees can become extremely polarized. It’s not surprising: it’s in the President’s best interests to choose...

The European Copyright Directive vote is in three days and it will be a doozy: what was once a largely uncontroversial grab bag of fixes to copyright is now a political firestorm, thanks to the actions of Axel Voss, the German MEP who changed the Directive at the last minute...

In July, millions of Europeans called on the Members of European Parliament (MEPs) to vote down a proposal that would impose copyright filters on European social media, and create a new power for newspapers to charge or sue anyone linking to their news stories. The MEPs listened to that call...

San Francisco – A federal appeals court today ruled that industry groups cannot control publication of binding laws and standards. This decision protects the work of Public.Resource.org (PRO), a nonprofit organization that works to improve access to government documents. PRO is represented by the Electronic Frontier Foundation (EFF), the law...

As we reported last week, JURI, the key European Parliamentary committee working on copyright reform, voted on June 20th to support compulsory copyright filters for media platforms (Article 13), and to create a new requirement on websites to obtain a license before linking to news...

SAN FRANCISCO - Stephanie Lenz and Universal Music Publishing Group (UMPG) today announced they have amicably resolved Lenz v. Universal, the widely followed litigation sometimes referred to as the “Dancing Baby” case. Lenz filed her complaint in 2007, after UMPG requested the removal of a video in which Lenz’s then-toddler...

Litigation can always take twists and turns, but when EFF filed a lawsuit against Universal Music Group in 2007 on behalf of Stephanie Lenz, few would have anticipated it would be ten years until the case was finally resolved. But today, at last, it is. Along the way, Lenz...